In India, a Retailer Finds Key to Success Is Clutter

November 16, 2010
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Impromptu bazaar Delhi

Impromptu bazaar, Delhi
American Business 2011
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In IndiaToronto Hydro using workers in India. Read more ... », a RetailerWal-Mart Stock History: How the World’s Biggest Retailer Created So Much Wealth for Investors. Read more ... » Finds Key to SuccessThe 7 Keys To Starbucks' Continued Success. Read more ... » Is Clutter
Consumers LikeFacebook, Silicon Valley like Indian Prime Minister Narendra Modi. Read more ... » Noise, Bins, Mr. Biyani SaysTarget says 40 million accounts hit by security breach. Read more ... »; Narrowing the Aisles

By ERIC BELLMAN

MUMBAI — On a tour of one of his supermarketsAmazon takes on Canadian supermarkets with digital storefront for groceries. Read more ... », Kishore Biyani notes that shoppingOnline sales overshadow stores in 4-day shopping frenzy. Read more ... » carts are getting stuck in the narrow aisles, wheat and lentils have spilled onto the floor, blackBrit’s vision of Black Friday in America goes viral. Read more ... » spots cover the onions and it’s difficult to hear above the constant in-storeThe Truth About Department Store Credit Cards. Read more ... » announcements. He grins and congratulates the store manager.

Mr. Biyani, 45 years old, has built a large businessThe 10 Worst Industries for Starting a Business. Read more ... » and a family fortune on the simpleSimple tips to help you save money everyday. Read more ... » premise that, in India, chaos sells.Americans and Europeans might like to shopFuture Shop stores closed across Canada, some to become Best Buy. Read more ... » in pristine and quiet storesOnline sales overshadow stores in 4-day shopping frenzy. Read more ... » where products are carefully arranged. But when Mr. Biyani tried that in Western-style supermarkets he openedNew Opened IH Online Mall Delivers Deals on Home and Outdoor Essentials. Read more ... » in India six years ago, too many customers walked downIndian funds worth a look as election winds down. Read more ... » the wide aisles, past neatly stocked shelves and out the door withoutChristmas without decked halls & Jingle Bells? For small business owners, could mean happier.... Read more ... » buying.

Mr. Biyani says he soonTarget Canada liquidation to begin soon. Read more ... » figured out what he was doing wrong. Shopping in such a sterile environment didn’t appeal to the lower middle-class shoppersStrong turnout as shoppers get to try Apple Watch. Read more ... » he was targeting. They were moreCPPIB chief urges more global approach. Read more ... » comfortable in the tiny, cramped stores — often filled with haggling customers — that typify IndianFacebook, Silicon Valley like Indian Prime Minister Narendra Modi. Read more ... » shopping. Most Indians buyFuture Shop stores closed across Canada, some to become Best Buy. Read more ... » their freshJoe Fresh debuts stores at J.C. Penney locations across the U.S.. Read more ... » produce fromOnline shopping detracts from Black Friday sales. Read more ... » vendors who keep vegetables under burlap sacks.

So Mr. Biyani redesigned his stores to make them messier, noisier and more cramped. “The shouting, the untidiness, the chaos is part of the design,” he says, as he surveys his Mumbai store where he just spent around ,000 to replace long, wide aisles with narrow, crooked ones: “MakingNew technology making cash registers obsolete. Read more ... » it chaotic is not easy.”

Even the dirty, black-spotted onions serve a function. For the average Indian, dusty and dirty produce means fresh from the farm, he says. Indian shoppers also love to bargain. Mr. Biyani doesn’t allow haggling, but havingCanadian retailers Danier Leather and Le Château having a rough year at the mall. Read more ... » damaged as well as good quality produce in the same box gives customers a chance to choose and think they are getting a better dealSobeys-Safeway deal approved. Read more ... ». “They should get a sense of victory,” he says.

The approachCPPIB chief urges more global approach. Read more ... » has made Mr. Biyani rich. His company, Pantaloon RetailWhy Macy's, Inc. Is a Great Retail Income Stock. Read more ... » (India) Ltd., is now India’s largest retailer; it expectsCostco Ekes Out Earnings Growth, Expects Further Expansion. Read more ... » to reportReport calls for ban on energy sales at home: Roseman. Read more ... » salesReport calls for ban on energy sales at home: Roseman. Read more ... » of more thanSears Canada takes gamble on groceries as losses more than double. Read more ... » 5 millionRona reports first-quarter loss of $16.6 million. Read more ... » for the fiscal yearCanadian retailers Danier Leather and Le Château having a rough year at the mall. Read more ... » ended in June. He and his family own a 42% stake in Pantaloon, valued at aboutThe Truth About Department Store Credit Cards. Read more ... » 0Loblaw to invest $1B in expansions, create 20,000 new jobs in 2016. Read more ... » million.

Mr. Biyani is proving that modern retailing, with a bit of spice, can work in a country where traditional markets dominate. On the backRetailers going back to free plastic bags. Read more ... » of his success — and rushing to closeSoon to be a snapshot in time, Blacks to close across Canada in August. Read more ... » his headBattle of the Bottom Line: Retailers Go Head to Head for Holiday Shopping Dollars. Read more ... » start — are someFour Retailers That Could Use Some Holiday Cheer. Read more ... » of the worldLe Château adapting in competitive world, founder says. Read more ... »’s largest retailersTarget's failure sends a message to international retailers. Read more ... ». While few may subscribe to Mr. Biyani’s chaos theory of retail, all will be struggling to find ways to attract the millions of Indian consumers who are shopping at branded chain stores for the firstUniqlo opens its first Canadian store. Read more ... » timeSoon to be a snapshot in time, Blacks to close across Canada in August. Read more ... ».

Wal-Mart Joint Venture

Wal-Mart Stores Inc. agreed thisCellular Sales Partners to Help Kansas City Children this Holiday. Read more ... » week to set up a joint venture with Bharti Enterprises Ltd. — which runs India’s largest cellularCellular Sales Partners to Help Kansas City Children this Holiday. Read more ... » company — that will openSaks Fifth Avenue prepared to open in Toronto. Read more ... » wholesale stores to sell goods to smallChristmas without decked halls & Jingle Bells? For small business owners, could mean happier.... Read more ... » retailers, manufacturers and farmers in India. Bharti plansWalmart plans stock buybacks; celebrity-laden annual meeting draws crowd. Read more ... » to spend .5 billion to build a nationwide network of supermarkets and small stores. Wal-Mart has to use this route intoGoldMax Expects to Pump Over $100 Million into Local Economy in 2012. Read more ... » India because Indian regulations don’t allow multiple-brand retailers to sell directly to consumers — but they can run wholesale operations and provide support to Indian retailers. Tesco PLC of the United Kingdom and Carrefour SA of France, are also eyeing India. Petroleum refiner Reliance IndustriesThe 10 Worst Industries for Starting a Business. Read more ... » Ltd., one of India’s largest companies by marketBirks picks up steam in wobbly market. Read more ... » value, plans to spend more than billion in the next five years to open thousands of supermarkets.All are hoping to tap into the rampant consumerHoliday shopping marathon starts as consumer sentiment shaky. Read more ... » spending sweeping India amid fast economic growthCostco Ekes Out Earnings Growth, Expects Further Expansion. Read more ... ». India’s total retail market is about 0 billion a year and will expand more than 55% in the next fourFour Retailers That Could Use Some Holiday Cheer. Read more ... » years, estimatesBest Buy profits top estimates after cutting costs. Read more ... » Technopak Advisors, a New Delhi-based retail consulting firm. It says sales of branded chain stores now represent less than 5% of total retail sales — but are expected to growHBC losses grow, Saks a bright spot. Read more ... » more than five-fold by 2011, accounting for 17% of retail sales.

Many more Indian women are working today and don’t have the time to visit several mom-and-pop stores. “I can’t go to 10 differentSaks Fifth Avenue in Canada will be different. Read more ... » stores to get 20 different things3 things to never do in a grocery store. Read more ... ». I’m a working mother,” says Candice D’Souza, a 28-year-old public-relations firm manager, who recently becameShopify became Canada’s tech darling by making shopping easier. Read more ... » a convert to Mr. Biyani’s Big Bazaar stores.

Wealthy Indians often employ servants who do most of the shopping. Many of Mr. Biyani’s unique touches are designed to make the household helpCellular Sales Partners to Help Kansas City Children this Holiday. Read more ... », rather than their employers, feel comfortable shopping. Indeed, he says that the greatest potential pool of customers for retail chains in India comes not from the wealthy but from those who work for them.

Mr. Biyani divides India’s 1GoldMax Expects to Pump Over $100 Million into Local Economy in 2012. Read more ... ».1 billion people into three types of consumers. “India One,” as he callsReport calls for ban on energy sales at home: Roseman. Read more ... » them, are those with good educations, good jobsCellular Sales Partners to Help Kansas City Children this Holiday. Read more ... », and muchWal-Mart Stock History: How the World’s Biggest Retailer Created So Much Wealth for Investors. Read more ... » disposable incomeWhy Macy's, Inc. Is a Great Retail Income Stock. Read more ... ». They also are the targetTarget says 40 million accounts hit by security breach. Read more ... » audience for many foreign companies seeking to sell their wares here. Mr. Biyani estimates that such customers comprise about 14% of the total population.

Where he sees the greatest sales potential is among consumers he calls India Two: the drivers, maids, cooks, nannies, farmers and othersLa Vie en Rose succeeds where others have failed. Read more ... » who serve India One. He estimates that 55% of Indians — roughly 550 million people — fall into this category. They are seeing their wages rise and their childrenCellular Sales Partners to Help Kansas City Children this Holiday. Read more ... » frequently pursue furtherCostco Ekes Out Earnings Growth, Expects Further Expansion. Read more ... » education and careers that will vault them up the socialChildren’s Place drops t-shirt after social media complaints. Read more ... » ladder. India Three, he says, is the rest of the nation — those at, or slightly above, subsistence level, who don’t represent much of a market for modern retailers.

He thinks any retailer that tries to re-createLoblaw to invest $1B in expansions, create 20,000 new jobs in 2016. Read more ... » a Western store in India will miss most potential customers. “People like to do what they think works in the West,” but India is different, he says.

Mr. Biyani has been studying Indian consumers for more than 20 years. Though many of his innovations are distinctly Indian, he credits icons of U.S. retailing as his inspiration. His copy of Wal-Mart founderLe Château adapting in competitive world, founder says. Read more ... » Sam Walton’s bookCellular Sales Partners to Help Kansas City Children this Holiday. Read more ... » “Sam Walton: Made in AmericaBrit’s vision of Black Friday in America goes viral. Read more ... »” is battered from constant use. From Mr. Walton, Mr. Biyani says he learned how to “rewrite the rules” in retailing. Mr. Walton’s photo hangs on his office wall below Mother Teresa’s. He also has written his own autobiography called, “It Happened in India.”

In the 1980s, Mr. Biyani left his family textile business to launch a business selling “stone washed” denim. He started his own lineBattle of the Bottom Line: Retailers Go Head to Head for Holiday Shopping Dollars. Read more ... » of shirts and trousers at a time when few Indians bought ready-made garments, and later opened clothingClothing outstrips computers to take online shopping crown. Read more ... » stores because he couldn’t get others to carry his products. When he decided to enter the supermarket business in 2001, his friends and executives told him India wasn’t ready. He thought otherwise.

FoodOnline, specialty stores eat into pet food sales. Read more ... » Bazaar, Mr. Biyani’s Western-style supermarket, now has 93 outlets in the country. Big Bazaar, which sells household goods and clothes and frequently is housed under the same roof as Food Bazaar, has 65 outlets. Mr. Biyani also has expandedExpanded Sherway Gardens opens doors Tuesday. Read more ... » into other businesses, including restaurants, bars, property, mallNew Opened IH Online Mall Delivers Deals on Home and Outdoor Essentials. Read more ... » management, mediaChildren’s Place drops t-shirt after social media complaints. Read more ... », a private-equity fund and a bowling alley. All his businesses are loosely gathered under an umbrella company called the FutureFuture Shop stores closed across Canada, some to become Best Buy. Read more ... » GroupResource Acquisition Group, Inc. Announces Change of Name to American Retail Group, Inc. and Change of Ticker Symbol to ?ARGB?. Read more ... », based in Mumbai.

The Big Bazaar and Food Bazaar stores make up more than 60% of the annualWalmart plans stock buybacks; celebrity-laden annual meeting draws crowd. Read more ... » sales of Pantaloon, the mainWSOP 2015: Aditya Agarwal debuts Team Pro India patch in Main Event. Read more ... » listed company in the group.

Public Market

Both Big Bazaar and Food Bazaar stores seek to invoke the atmosphere of a public market, Mr. Biyani says — albeit in the air-conditioned malls that are springing up around India. The outlets have floors of gray granite tiling, common in markets and train stations, so newcomers who have never3 things to never do in a grocery store. Read more ... » been in a large, modern store feel at homeReport calls for ban on energy sales at home: Roseman. Read more ... ».

Instead of long aisles and tall shelves, the stores cluster products in bins and on low shelves. With long aisles, he says, “the customers never stopped. They kept on walking on and on so we had to create blockages.”

The bins let customers handle products from different sides. Decades of shopping from stalls also means that most customers feel more comfortable looking down when they shop, he says. Narrow, winding aisles create small traffic jams that make people stop and lookIndian funds worth a look as election winds down. Read more ... » at products. Last month, one of his first stores in Mumbai changed from long, straight aisles to the haphazard cluster design. “Sales are up 30% since the changeResource Acquisition Group, Inc. Announces Change of Name to American Retail Group, Inc. and Change of Ticker Symbol to ?ARGB?. Read more ... »,” Mr. Biyani saidHudson’s Bay Co. said to be preparing bid for German stores. Read more ... », as he struggled to walk through the knots of shoppers at the store.

Indian consumers aren’t used to processed and packaged goods, so the stores sell wheat, rice, lentils and other products out of large buckets. Housewives want to grab handfuls, checking them out for pebbles, quality and smell, he says. Mr. Biyani tells his staff not to tidy up, as he noticed that customers are less likely to check out a product if it is in neat stacks. He scoops up a handful of plasticRetailers going back to free plastic bags. Read more ... » razors from a pile in a bin. “When it is like this,” he says, “it feels like a good deal.”

Because he says Indians like to talk and consult and bicker as they buy, the stores have up to three timesAs online shopping picks up, delivery times shorten. Read more ... » the number of employees per square foot than a typical Wal-Mart. A few employees walk around the store usingToronto Hydro using workers in India. Read more ... » megaphones to announce promotions, adding to the din from constant music and commercials playing in the background. Mr. Biyani doesn’t want his stores to be quiet or relaxing. Many of the stores aren’t air-conditioned — on purposeEarly Black Friday deals give U.S. Thanksgiving new purpose. Read more ... ».

The announcements and ads are done in India’s many localGoldMax Expects to Pump Over $100 Million into Local Economy in 2012. Read more ... » languages to make non-English speakers feel welcome. “We advertise in the language that people dream in,” says Mr. Biyani, who is proud he isn’t one of the many business leaders in India who has lived or studied abroad. Though he speaks the language, “I don’t dream in English,” he says.

Mr. Biyani’s chaos theory of retailing extends only so far. When it comes to taking in money and making sure there are plenty of goods for customers to peruse, his stores strive to be as efficient as any in the world. They run softwareCellular Sales Partners to Help Kansas City Children this Holiday. Read more ... » from GermanHudson’s Bay Co. said to be preparing bid for German stores. Read more ... » technologyNew technology making cash registers obsolete. Read more ... » giantU.S. vitamin giant arrives in Canada. Read more ... » SAP AG to find out when a new brand of noodle isn’t selling well in Bangalore or the supply of curds is running low in Kolkata. More than 50,000 itemsSave With Dollar-Store Holiday Items -- Savings Experiment. Read more ... » are delivered using just-in-time inventory. And the stores have large numbers of cashiers to ensure that the checkout process is fast.

Not all his efforts to replicate the feel of a market have worked. When thousands lined up in front of each of his Big Bazaar stores for an annual sale in 2005, he had to shut down stores earlyEarly Black Friday deals give U.S. Thanksgiving new purpose. Read more ... » and call in the police to avoid rioting. In Bangalore, the police forced the management of one Big Bazaar to extend the sale by one day to calm the angry crowdWalmart plans stock buybacks; celebrity-laden annual meeting draws crowd. Read more ... ». Now his annual sales run for three days and he uses ropes to control the long lines.

The approach also has its limits. Mr. Biyani’s departmentThe Truth About Department Store Credit Cards. Read more ... » stores, called Pantaloon, are aimed at wealthier Indians, who are likely to have either lived or traveled abroad and expect a different shopping experience. There, floors are scrubbed, the air is cool, and every item is carefully arranged on shelves.

As others now roll out their own supermarkets, Mr. Biyani says there is enough business for everyone, but that it will takeClothing outstrips computers to take online shopping crown. Read more ... » years for newcomers to catch up with him. He also argues that India doesn’t need foreign mass-market retailers yet and is part of retail-industrySimons expanding in Canada, defying retail industry woes. Read more ... » associations that support restrictions on foreign investment. He says foreigners might dump products on India to gain market share and ruin Indian retailers before they have a chance to grow. He has voiced concerns about foreign companies taking profitsBest Buy profits top estimates after cutting costs. Read more ... » out of India.

In the meantime, he is taking his experiments into what Indian consumers want into a different domain.

Former Milking Shed

AcrossJoe Fresh debuts stores at J.C. Penney locations across the U.S.. Read more ... » Mumbai, on the site of a former milking shed, is Orchid CityCellular Sales Partners to Help Kansas City Children this Holiday. Read more ... » Centre Mall. Mr. Biyani’s Pantaloon Retail owns the mall and manages most of the 20-plus stores inside. It is a petri dish to test new retail formats and adapt them for Indian consumers. It has the Future Group’s own bookstore, electronics, children’s clothing, plus-size clothing, home furnishing and drug stores as well as a video arcade, food court, gym, beauty salon and banquet hall.

While he expects brisk demand for the banquet hall from weddings, he has already figured out that his customers don’t want .50 coffeeCellular Sales Partners to Help Kansas City Children this Holiday. Read more ... ». The gourmet coffee shop has shut down and stands empty while he thinks of something else to put in its placeChildren’s Place drops t-shirt after social media complaints. Read more ... ».

The biggestWal-Mart Stock History: How the World’s Biggest Retailer Created So Much Wealth for Investors. Read more ... » pull in the mall is still the chaotic Big Bazaar and Food Bazaar. He put them on the top floor, to force shoppers to see the rest of the mall when they come to buy rice. It seems to be working. The penthouse grocery3 things to never do in a grocery store. Read more ... » store is packed and the mall is crawling with shoppers pushing grocery carts.

“Nobody knows,” what will sell until they try, says Mr. Biyani. “We all have to discover by doing.”

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